1. IntroductionInspired by the teachings and writings of Ludwig von Mises, Israel
Kirzner has devoted his career to the exploration and development of Misesian
themes. Mises's very conception of the nature of economic science—as the
study of market processes anchored to a theory of human action—underlies
the whole of Professor Kirzner's work. A scholar of the first order in
his own right, Kirzner has pushed beyond Mises in several instances to
the point of making the Misesian theories his own. We owe our understanding
of competition and entrepreneurship and of capital and interest as much
to Kirzner himself as to his mentor.
In the half-dozen
sections to follow, the focus is on the Misesian/Kirznerian theory of capital
and interest with special attention to the pure time preference theory.
It seems fitting that this paper draws liberally from earlier writings
of my own, going back almost to the year (1974) when I first heard Professor
Kirzner lecture at South Royalton, Vermont—at the conference now taken
to mark the beginning of the modern Austrian resurgence. Section 2 draws
from a 1997 review article, (1) which deals
with Kirzner's 1996 Essays on Capital and interest, a book that
compiles more than a quarter of a century of his theorizing. Several of
the remaining sections draw to one extent or another from a formal comment
on Peter Lewin's "Rothbard and Mises on Interest: An Exercise in Theoretical
Purity." (2) Lewin presented this paper
at the Southern Economic Association meetings in New Orleans in 1995. My
comment was never published in any form, but the discussion below (Section
6) on the parallels between a time-preference theory of interest and a
leisure-preference theory of wages is adapted from it. Also included in
the present paper (and in the 1995 comment) is an edited excerpt from an
ancient unpublished paper, "Reflections on Misesian Time Preference." which
was presented in 1975 at the Conference on Austrian Economics at the University
of Hartford, Hartford, Connecticut. (3)
Comparing Mises's interest-rate theory to that of Frank Knight, this old
conference paper and Section 5 below suggest that the Mises/Knight contrast
in the reckoning of time preference is analogous to the Kelvin/Fahrenheit
contrast in the reckoning of temperature. Although the pairing of Mises
and Kelvin in this regard resonated among the participants, the idea never
found its way into print until now.

2. Capital and Interest (1966-1996)Eugen von Böhm-Bawerk, whose name has come to be virtually synonymous
with "roundaboutness" (of capital-using production processes), penned the
original Austrian perspective on capital and interest.
(4) He wrote three volumes (History and Critique, Positive
Theory, and Further Essays) over a span of a quarter of a century
(1884-1909). In 1959 the twelve-hundred-plus pages of Capital and Interest
were translated into English by Hans Sennholz and George Huncke. In his
spirited review of the new translation, Mises described this "monumental
work" as "the most eminent contribution to modern economic theory."
(5) Mises went so far as to suggest—as only Mises could—that
no citizen who takes his civic duties seriously should exercise his right
to vote until he has read Böhm-Bawerk!
With a lag of
more than eight decades, Kirzner's writings echo Bohm-Bawerk's. The years
over which Kirzner gave attention to the economics of a capital-using economy
are at par with those of his early Austrian predecessor, spanning from
his 1966 Essay on Capital to his 1996 Essays on Capital and Interest:
An Austrian Perspective. (6) There is
no intent here to insert these volumes between the voter and the voting
booth. However, the position that these writings occupy on the Austro-neoclassical
landscape is an eminently imposing one—so imposing as to warrant our issuing
a Mises-style taboo, not to voters, but to all economists who adopt the
Austrian perspective. But first we must put into perspective Kirzner's
insights into the nature of capital and interest, focusing for this purpose
on his 1996 Essays and saving our taboo for the final section.
These Essays
provide a virtual history—and pre-history—of the modern Austrian resurgence,
which dates to that 1974 South Royalton conference. The four parts of Kirzner's
1966 book (on "Unfinished Plans," "Stocks and Flows," "Capital and Waiting,"
and "Measuring Capital") read like the work of a lone scholar trying—succeeding
in most instances—to satisfy himself. This early book, possibly the most
underrated of all his contributions, appears anew as the longest of the
1996 Essays.
In late 1974,
Kirzner presented a paper titled "Ludwig von Mises and the Theory of Capital
and Interest" in a special symposium at the Southern Economic Association
meetings in Atlanta. At that time, a year after Mises's death and a few
months after South Royalton, there was a small but eager audience for the
Austrian perspective. Kirzner shows how Mises's theory differs from Böhm-Bawerk's
and how it compares favorably to the theories of J. B. Clark and F. H.
Knight. In part a stocktaking, in part a research agenda for himself and
for others, this paper was first published in 1976 along with other papers
at the SEA symposium (7) and published again
in 1979 along with other writings by Kirzner. (8)
Its appearance in the 1996 volume provides a perfect segue between his
early work on the theory of capital and his later work on the theory of
interest.
The final essay,
"The Pure Time-Preference Theory of Interest," first published in 1993
(9), is clearly the work of a well-seasoned scholar. Kirzner's
good scholarship shines though in all his writings, but here we see him
as a veteran of many symposia and conferences complete with their unyielding
question-and-answer sessions. His work had attracted a growing and challenging
audience. He responds to criticisms as if he has heard those criticisms
many times before and in many different forms—because he has. The exchanges
with allies and critics over the years have allowed him to clarify his
own ideas and to offer them in the most rhetorically effective ways.
Ralph W. Pfouts,
who offered a generally favorable assessment of the 1966 Essay in
the
American Economic Review, suggested that the Austrian perspective
is not "the magic wand that makes all mysteries disappear."
(10) Kirzner, with his 1996
Essays, and especially with
his essay on the theory of interest, shows that it is very nearly just
that. Interest is always and everywhere a matter of time preferences. The
primordial preference for the sooner over the later is the basis for a
unified treatment of intertemporal exchange—whether the exchange is with
nature in a Robinson Crusoe setting or with other economic actors and whether
or not it involves the use of capital. Tracing out the consequences of
the systemic discounting of the future provides us with a Copernican account
of an economic phenomenon that otherwise would have to be explained by
what we might justifiably call Ptolemaic interest-rate theory. Capital-productivity
theories and waiting-as-a-factor theories appear strained, partial, and
oblique in comparison to the pure time-preference theory—that magic wand
so skillfully wielded by Professor Kirzner.
If interest
is to be understood in terms of time preferences, capital is to be understood
in terms of multiperiod plans. An Austrian subjectivist perspective on
capital features the plans of individual entrepreneurs—plans that are subject
to revision as the attempts to carry them out reveal conflicts with reality
and with the unfolding plans of other entrepreneurs. As Kirzner demonstrates
time and again, the forward-looking, plan-oriented account of a capital-using
economy wins out over the alternative accounts that focus on some isolated
slice of time or on the physical productivity of the produced means of
production.

3. Sooner or Later; More or LessOn the key questions of interest (Is the interest rate necessarily
positive? How is the market rate of interest determined?) Kirzner is a
thoroughgoing Misesian: The phenomenon of interest—the very existence of
it—is virtually synonymous with the notion of time preference. The particular
rate of interest is a reflection of a systematic time discount—a discount
that manifests itself overtly in the market for loanable funds and that
permeates the entire market system in the form of actual and implied intertemporal
price relationships. However complex the relationships may be between the
spot price of copper and the price of a copper-futures contract or between
the spot price of grapes and the price of (future) wine, the market registers
a systematic and premordial preference for sooner as compared to later.
In the Austrian
tradition, the notion that sooner is preferred to later has the same status
as the more conventional and widely accepted notion that more is preferred
to less. Both notions are applicable only under
ceteris paribus
conditions, and exceptions abound, as when a specific quantity (one lump
of sugar and not two in your coffee) or specific timing (coffee in the
morning and not tonight) is an integral part of what gives the good its
subjective value or when the object being valued is actually a "bad" instead
of a "good" (coffee as served in England).
In his most
recent account of Mises's theory, Kirzner deals with these sorts of exceptions
in terms of an example provided by Mises himself: The fact that people
prefer ice next summer to ice this winter provides no evidence against
the time preference theory of interest. Rather, in this and many other
cases, the timing of the good's availability should be considered as an
integral part of the definition of the good. (11) Still, Kirzner
notes, Mises's theory of capital and interest, especially when compared
to the alternative theories advanced by Irving Fisher or Frank Knight,
presents a puzzle to the modern mainstream and even to fellow Austrians.
(12) What accounts for the radical difference between the Austrian
theory and the neoclassical theory? Recognizing that the seemingly similar
terminology belies the radical difference, Kirzner hints at a resolution
to the puzzle: "For Mises, time preference refers not to dates [as it does
in modern mathematical formulations], but to
future distances from
the moment of evaluation." (13) The resolution
he has in mind may well be consistent with—and elaborated by—the arguments
in the following two sections.

4. Time Preference Theory: Formulation and ApplicationPeter Lewin reminds us that in Mises's Human Action and in its
1940 predecessor,
Nationalökonomie, there is some variation
in his statements as to what in particular is preferred in the present
(14) The terms "consumption," "satisfaction," "gratification,"
and "enjoyment" are each used separately or in combination with no apparent
effect on the intended thrust of the statement. While Lewin sees the variations
on a theme as indication of "potential inconsistencies,"
(15) there is a strong basis for seeing the theme itself as giving
unity to Mises's various arguments. Each of these terms refers to some
action or to the hoped-for result of some action. In keeping with Mises's
"praxeology" (which means, literally, "action logic"), the most basic and
most general proposition that expresses Misesian time preference is one
that refers to action per se rather than some particular category
of action, such as consumption, or some anticipated result of action, such
as satisfaction. In this respect, the heading of the section containing
Mises's various renditions of the time-preference theorem may be more instructive
than any or all of the various statements quoted by Lewin. The section
heading reads: "Time Preference As an Essential Requisite for Action."
(16) That action
per
se is the ultimate basis for Mises's time preference theory is even
more evident in Mises's earlier reckoning: "Whoever uses or consumes anything,
whoever seeks by acting to relieve to a greater or lesser extent a felt
uneasiness is expressing a preference for an earlier over a later satisfaction."
(17) The focus here is clearly on "acting." And even the phrase
"uses or consumes" can be taken as all inclusive; it excludes no conceivable
(purposeful) action. Whoever uses or consumes anything simply means whoever
behaves purposefully or simply whoever acts. By acting now the individual
reveals that such is preferred to deferring action. And since all acts
are directed at achieving satisfaction (or gratification or enjoyment),
the individual reveals a preference for consumption in the nearer future
to consumption in the more remote future. This is the Misesian time preference
theorem. It is formulated in terms of action and then
applied
(variously) to the anticipated results of the action.
Mises's formulation
differs fundamentally from those of Fisher and Knight. While Fisher's formulation
has come to dominate modern textbooks, Knight's formulation, similar in
all relevant respects to Fisher's, allows for the most direct and telling
comparison with Mises's. The salient difference between Knight and Mises
concerns the "reference pattern" of consumption that serves as a basis
for gauging time preferences. According to Mises, any action, including
the act of consuming, serves as evidence of (positive) time preference.
The absence of time preference, or zero time preference, could be associated
only with inaction. Apart from this praxeological benchmark, however, no
particular temporal pattern of consumption would be inconsistent with the
general preference for sooner over later.
For Knight,
the reference pattern is not a pattern of zero consumption (or zero action)
but one of uniform consumption, a notion found in Knight's earliest writing:
"[A] zero time preference obviously means a uniform distribution (of consumption)
over time." (18) This stating of the "obvious"
underlies Knight's simple taxonomy of time preferences. Having established
a reference pattern, actual time preferences can be categorized as positive,
zero, or negative. Individuals who prefer a uniform pattern of consumption
over all other possible patterns exhibit, by definition, a zero time preference.
Individuals who prefer a relatively high rate of consumption in the nearer
future at the expense of a relatively low rate in the more remote future
are characterized as having positive time preference, while those who prefer
a relatively low rate of consumption in the near future coupled with a
relatively high rate in the more remote future are characterized as having
a negative time preference.

5. Mises is to Knight as Kelvin is to FahrenheitWhich of the two formulations, Knight's or Mises's, is the more substantive
or meaningful? Ultimately, Knight's criticism of the Misesian formulation
was not that it is wrong or illogical but that it is "without meaning,"
that a meaningful preference of present over future consumption would have
to be measured with respect to a uniform rate of consumption over time.
(19) But Mises, having been critical of Bohm-Bawerk's psychology-based
theory, was intent on basing his own theory squarely on the choices and
actions of individuals. This essential praxeological grounding is the Austrian
criterion for meaningfulness, and it is in this respect that Knight's formulation,
based as it is on an arbitrary (though Knight said "obvious") reference
pattern of consumption, falls short.
It can be hazardous
to point out parallels between developments in the social sciences and
developments in the physical sciences—precisely because of the inapplicability
of praxeology to physical phenomena. But it is instructive, particularly
in regard to the question of meaning, to liken the two different "measures"
of time preference to two different measures of temperature. References
to temperature scales are frequently made in discussions of the cardinal
and ordinal measures of utility—the cardinal measure, which admits of all
linear transformations, being likened to the measure of temperature. For
our purposes, however, the focus is not on the transformability but rather
on the reference point, or zero point, that serves as a basis for the measure.
The measure
of time preference in the Misesian formulation corresponds to the measure
of temperature in degrees Kelvin. William Kelvin based his scale on the
relationship between temperature and (molecular) motion in the same sense
that Mises based his interest-rate theory on the relationship between time
preference and (purposive) action. That is, a total absence of molecular
motion corresponds to a temperature of zero degrees Kelvin. Any motion
whatever is evidence of a temperature greater than zero. Similarly, any
purposive action whatever is evidence of non-zero time preference, while
negative time preference is as unthinkable as negative action. Just as
a positive temperature is a universal fact in a world of motion, so positive
time preference is a universal fact in a world of action. The impossibility
of negative temperature and negative time preference does not render the
formulations meaningless. Quite to the contrary, these impossibilities
derive from the fact that temperature is based on motion, time preference
on action.
The measure
of time preference in the Knightian formulation corresponds to the measure
of temperature in degrees Fahrenheit. The construction of the respective
scales for both Knight and for Fahrenheit began not from an awareness of
any particular theoretical relationship, but from the awareness that "there
is something there to be measured." In order to establish a basis for measurement,
a zero point had to be chosen. There are conflicting reports about just
how Gabriel Fahrenheit chose his zero point (Amsterdam's record low for
the winter of 1714?), but the choice is generally recognized to be an arbitrary
one. A temperature of zero degrees Fahrenheit has no particular significance.
Superficially,
the zero point of the Knightian time-preference scale seems to have at
least some significance. As noted above, Knight considered the uniform
rate of consumption to be the obvious choice for a reference pattern. But
upon further reflection, the arbitrariness of Knight's reference pattern
becomes apparent. First, outside the artificial context of a one-good world,
the notion of a uniform rate of consumption of a heterogeneous collection
of goods and services has no unambiguous meaning.
(20) Second, the idea of a uniform rate fails to link up in any
theoretical way with the actual choices and actions of market participants.
It is neither an objective nor a constraint. And finally, except for simple
temporal patterns of consumption (monotonically increasing or monotonically
decreasing over time), the ranking of patterns in accordance with the implied
time preferences or even the identification of a pattern as involving positive,
zero, or negative time preference may not be possible. Here the switching
and re-switching of the Cambridge capital controversy come to haunt.
Having chosen
an arbitrary zero point, both positive and negative values of Fahrenheit
temperature and of Knightian time preference are (equally?) possible. Whether
actual temperatures or time preferences are positive or negative is simply
an empirical question. It is the mere fact that this question can be answered
sometimes one way and sometimes another that seems to give meaning to both
the question and the answer. But in relation to individual choices and
actions, the contrasting answers (negative and positive) are as meaningless
as their dividing line is arbitrary.
The Farhenheit
and Knight scales give no hint of the lower limits to the things being
measured, as do the Kelvin and Mises reckonings. The fact that temperatures
and time preferences actually observed cannot drop below absolute zero—and
in most applications do not even approach absolute zero—does not deprive
Kelvin's and Mises's theory of meaning. The meanings, rather, derive directly
from these essential facts of physical and economic reality.

6. Time Preference and Leisure PreferencePre-Austrian economists commonly divided the factors of production
into the classical trilogy: land, labor, and capital. Mises's insights
into the nature of capital suggest that a more appropriate categorization
would be land, labor, and time—with land and labor (or, equivalently, nonhuman
and human factors) designated as the "original" or "primary" factors of
production. (21) In the imaginary construct
of the evenly rotating economy, where there are no profits and losses,
all income can be either attributed directly to these original factors
of production or, using Kirzner's phraseology, "swept back" to them through
the market's process of value imputation and time discounting. Drawing
from the Austrian trilogy, we can say that it is labor and time that are
the most inextricable tied up with human action. In fact, praxeology as
conceived by Mises is defined as logic in the context of purposive action
and the passage of time. (22) Given this construction
articulated by Mises and ably defended by Kirzner, we might wonder why
there isn't an analytical symmetry between the theory of interest and the
theory of wages. We have a time-preference theory of interest. Why do we
not have a leisure-preference theory of wages. Resources which fall into
the category of land are converted into consumable output with the aid
of labor and time—or, to emphasize the notion of process, through working
and waiting. If working and waiting were ends rather than means, then people
would not have to be paid to perform these functions. It is precisely because
of their status as means that, in a market setting, people do have to be
paid a positive wage rate and a positive rate of interest.
So, why did
Mises not deduce from the action axiom that the (originary) wage rate is
necessarily positive? It would seem that the case for a primordial leisure
preference and a positive wage rate is a direct parallel to—and is as strong
as—the case for a primordial time preference and a positive rate of interest:
According to the action axiom, people employ means (labor) to achieve ends.
If labor, as contrasted to the forgone leisure, were itself a consumption
activity, an end, then the whole means-ends framework would lose its relevance.
In reality, however, labor is a means. Mises would have had to deal with
the apparent exceptions in the forms of labor of love and escape from boredom,
but these exceptions would strengthen rather than weaken the parallels.
Instead of maintaining
the parallel in this way, Mises started with the action axiom and then
added the apparently supplementary proposition that "Labor is a means,
not an end in itself." (23) Posing our
question about possible parallels an alternative way, we might ask: Why,
then, did Mises not add a second supplementary proposition to the effect
that people put a premium on the present? The parallel could have been
maintained in this alternative way. With this construction, the rest of
the Misesian system would remain intact—and the lingering "puzzle" about
Mises time-preference theory of interest would never have confronted its
critics and admirers.
It is worth
noting that Alfred Marshall did maintain a parallel between the payment
of interest and the payment of wages. According to him, our understanding
that "waiting" must be rewarded rather than penalized, i.e., that the rate
of interest is positive, is (at least on an intuitive level) a close parallel
to our understanding that working has to be rewarded rather than penalized.
Marshall claims that a state of affairs in which the interest rate is negative
and hence waiting penalized is conceivable. He immediately puts this claim
into perspective by pointing out that "it is also conceivable, and almost
equally probable, that people may be so anxious to work that they will
undergo some penalty as a condition of obtaining leave to work"(24)
He mentions prisoners eager to be assigned to unpaid work details. Marshall
argues with his characteristic rhetorical effectiveness and maintains a
perfect parallel, in this respect, between interest and wages: Under exceptional
conditions, people might be willing to pay to work or pay to wait, but
under more normal conditions, they would have to be paid to work and be
paid to wait.
Mises actually
offers an answer to the question: "Why no leisure-preference theory of
wages to complement the time-preference theory of interest?" He argues—though
questionably, as pointed out below—that a zero or negative time preference
confronts us with a contradiction, while a zero or negative leisure preference
does not. A primordial preference for achieving ends later rather than
sooner (or an indifference as between sooner and later) is, in Mises's
construction, contradictory to the action axiom. But no analogous contradiction
arises in the case of a negative or zero leisure preference.
The possibility
and implications of a zero leisure preference can be pieced together from
his Chapter II "The Epistemological Problems of the Science of Human Action"
and his Chapter VII "Action within the World." In a section of Chapter
II entitled "The Procedure of Economics," Mises writes:

The disutility of labor is not of a categorical and a prioristic
character. We can without contradiction think of a world in which labor
does not cause uneasiness, and we can depict the state of affairs prevailing
in such a world. But the real world is conditioned by the disutiltiy of
labor. Only theorems based on the assumption that labor is a source of
uneasiness are applicable for the comprehension of what is going on in
this world. (p. 65)

In a section of
Chapter VII entitled "Human Labor as a Means," Mises returns to the issue
of leisure preferences:

In a world in which labor is economized only on account of
its being available in a quantity insufficient to attain all ends for which
it can be used as a means, the supply of labor available would be equal
to the whole quantity of labor which all men together are able to expend.
In such a world everybody would be eager to work until he had completely
exhausted his momentary capacity to work. The time which is not required
for recreation and restoration of the capacity to work used up by previous
working, would be entirely devoted to work (p. 131).

This passage seems to suggest that in the absence of a leisure preference,
the Misesian means-ends framework, so closely associated with the action
axiom, degenerates into a Knightian circular flow, in which individuals
work to eat and eat to work. It is devoid of any genuine acts of consumption
that are not at the same time a prerequisite for expending still more labor.
But Mises' praxeology is based firmly on a means-ends framework that exhibits
an essential temporal linearity: the employment of means precedes and is
distinct from the corresponding achievement of ends. To recognize the means-ends
linearity as essential is to reject the notion of the Knightian circular
flow. Kirzner's criticism of the Clark-Knight synchronization view is to
the point here. (25) The necessity of avoiding
the eclipse of the means-ends framework that the circular flow entails
would seem to give an a prioristic character to the notions of a
(positive) leisure preference, which recognizes that means and ends are
distinct and a (positive) time preference, which recognizes that means
precede ends.
Further, a leisure-preference
theory of wages, paralleling the time-preference theory of interest, would
concern itself with the existence of positive wage rate. Issues of wage-rate
determination as actually brought about by the market process could admit
of all sorts of considerations, such as specific complementary relationships
between leisure time and consumption goods. Insights into the allocation
of time as spelled out by Gary Becker and others would fit into such an
understanding of wages at both a theoretical and an applied level.

7. Concluding Observations and a Mises-Style TabooI have not actually constructed—let alone recommended—a leisure-preference
theory of wages. Rather, I have hinted how such a theory might be constructed
and suggested that virtually the same consideration (the need to avoid
contradicting or eclipsing the action axiom or the temporally linear mean-ends
framework) that led Mises to construct a time-preference theory of interest
might well have led him to construct a leisure-preference theory of wages.
But there is
a greater point. Replacing Mises's supplementary proposition that leisure
is a consumer good with a more thoroughgoing praxeological treatment of
labor and wages is not apt to have much of an effect on the rest of the
Misesian system. Alternatively, replacing Mises's thoroughgoing praxeological
treatment of waiting and interest with an supplementary proposition that
individuals tend to discount the future is not apt to have much of an effect
on the rest of the Misesian system.
The robustness
of Austrian economics with respect to its epistomological underpinnings
has been demonstrated in a more general sense by Murray Rothbard. In an
early article, Rothbard questioned the epistemological status of Mises's
action axiom. Arguing "In Defense of Extreme
Apriorism,"
(26) Rothbard took an Aristotilian stance, claiming that our
understanding that individuals engage in purposeful action—that they employ
means to achieve ends—is ultimately a broad empirical observation, which
includes, of course, introspection. Mises, by contrast, had taken a Kantian
stance, claiming that human action was an a priori category.
Modern practitioners
of Austrian economics can hardly help but notice how little this basic
disagreement over the underlying epistemology affected the development
and application of economic theory. My discussion of the alternative roles
of praxeological truths and supplementary propositions suggests that Austrian
economics may also be robust with respect to the differing treatments of
the issues of interest and wages—and that recognizing this robustness might
be a way of putting to rest the "puzzle" of Mises time-preference theory
of interest.
Whatever the
ultimate resolution of the puzzles with which theories of capital and interest
confront us, the writings of Professor Kirzner are bound to figure in importantly.
In my 1997 review article, I issued a Mises-style taboo specifically aimed
at Austrian macroeconomists: No Austrian economist who takes his subjectivism
seriously should erect macroeconomic models until his has read Kirzner's
Essays.
Here, the taboo can be reissued in a more general form: No future academic
who takes the issues of capital and interest seriously should attempt to
make his own contribution to that literature until he has mastered Professor
Kirzner's.

Garrison, R. (1990) "Austrian Capital Theory: the Early
Controversies," History of Political Economy, supplement to Vol.
22, pp. 133-154. Published in hardcover as B. Caldwell, ed., Carl Menger
and his Legacy in Economics, Durham, NC: Duke University Press.

Garrison, R. (1995) "The Robustness of the Mises-Rothbard
Theory of Interest: Comment on Lewin," unpublished comment. Presented at
the Southern Economic Association meetings, New Orleans.

3. Garrison-1975. The 1975 conference
at Hartford was the follow-on conference to South Royalton. At South Royalton,
participants listened to lectures by Israel Kirzner, Ludwig Lachmann and
Murray Rothbard. Other senior Austrian economists present included Henry
Hazlitt and Bill Hutt. The lectures were published in Dolan-1976. At the
University of Hartford, the South Royalton listeners presented their own
papers, which were then discussed by the seniors. Senior discussants included
two of the lecturers of the year before (Kirzner and Rothbard) plus Friedrich
Hayek Bill Hutt, Emil Kauder and Leland Yeager. No conference volume was
ever published.

4. Böhm-Bawerk-1959.

5. Mises-1959, p. 52.

6. Kirzner-1966 and Kirzner-1996.

7. Moss-1976.

8. Kirzner-1979.

9. Herbener-1993.

10. Pfouts-1968, p. 98.

11. Kirzner-2001, p. 158; Mises-1966,
pp. 489-490.

12. Kirzner-2001, p. 149.

13. Ibid., p. 159.

14. Lewin-1997, pp. 146-150.

15. Ibid., p. 148.

16. Mises-1966, p. 483.

17. Lewin-1997, p. 150. Lewin is quoting
from a translation of a section of
Nationalökonomie that Mises
specifically identifies as relevant (Mises-1966, p. 488). The translation
of the entire section, titled "A Critique of Bohm-Bawerk's Reasoning in
Support of His Time Preference Theory," is included in Greaves-1974, pp.
150-157.

18. Knight-1921, p. 132.

19. Knight-1941, pp. 412-13

20. Kirzner-1996, pp. 67-69. Even
Knight himself recognizes the element of arbitrariness when he shifts the
focus from a temporal pattern of consumption to the choice during each
income period between consuming and accumulating wealth: "The only possible
basis for interest theory is simply to assume some indifference curve between
current income as consumption and as increase in wealth" (Knight-1934,
p. 272n).

21. Mises-1966, pp. 637-640.

22. Mises-1966, pp. 99-100.

23. Mises-1966, p. 131. Murray Rothbard
is more explicit about adding the supplementary proposition. His labor
economics is "derived from the implications of the action axiom and the
assumption of leisure as a consumers' good" (Rothbard-1962, p. 40). In
a related footnote, he continues: "This [proposition that leisure is a
desirable good] is the first proposition in this chapter that has not been
deduced from the axiom of action. It is a subsidiary assumption based on
empirical observation of actual human behavior. It is not deducible from
human action because its contrary is conceivable, although not generally
existing" (p. 437, n.27).